MNI INTERVIEW: China May Set No GDP Target, Or A Range-Advisor

--Part 1 of Interview with Counsellor to Central Govt 

--Q2 Economy to Improve 'Greatly' 

--Q3,Q4 Contingent on Pandemic

     BEIJING (MNI) - China may alter its usual practice of setting a single

growth target for the year, instead doing without one or opting for a broad

range to account for Covid-19 uncertainties while still providing direction for

local authorities, an advisor to the State Council told MNI, citing his own

opinions.

     "In a normal situation, setting a target, and usually if we do, we tend to

achieve it, serves to boost confidence for the regional governments and

businesses," Counsellor Tang Min said in an interview on Apr. 24, adding that

this time it would be more realistic to provide a wide target range given the

unforeseeable outcomes of the pandemic.

     Tang stressed that there are "pluses and minuses" to setting a target or

not, and that the decision will be up to the Two Sessions parliamentary meeting

which was originally due to take place in March but is now widely expected next

month.

     --IMF OVERLY PESSIMISTIC

     If the pandemic in China and overseas continues to be brought under

control, the IMF's prediction for Chinese annual GDP growth of 1.2% this year

may prove overly pessimistic, Tang said. The economy will "certainly greatly

improve" in the second quarter following Q1's 6.8% decline in GDP, as much of

the resumption of normal activity got underway in March and April. Exports may

also rebound later this year, probably more strongly than generally expected, as

European and U.S. markets emerge from lockdowns Tang said.

     With pent-up demand for essential goods in developed economies, China is

well positioned, given that its production capacity is almost fully restored, he

said.

     "There are signs that overseas orders are coming back," Tang said, adding

that many Chinese exporters' product inventories abroad are empty.

     More critical than any shortage of orders are logistical bottlenecks, with

reduced air and marine cargo availability, Tang said. Some passenger flights

could be converted to cargo, as leisure travel may be limited for a long time,

he said.

     Imports will likely follow if exports recover as the two are closely

related, Tang said.

     "As long as we protect our businesses and our employment at the expense of

some profits it's a matter of sticking through the next month or two," he said.

     --CONSUMPTION RECOVERY SLOWER

     Consumption, especially of services, will take longer to return to normal

levels, though, with Tang noting that conditions will be "very difficult" for

restaurants and tourism while the public remains cautious, particularly given

reported recurrences of the virus in some regions.

     The authorities need to create short-term demand, he said, pointing to how

some cities are already issuing coupons to consumers to encourage purchases.

     While the government plans infrastructure investments and urban renewal,

such large-scale projects take months and years to get off the ground and will

have little impact on the next one or two quarters, he said.

     "We should not focus too much on GDP growth itself, but on protecting the

labour force and market entities," particularly entrepreneurs and other small

proprietary businesses that have no access to bank loans, Tang said.

     While the U.S. has taken more dramatic measures such as unlimited monetary

easing and issuing money to individuals, Tang said China's policies have been

more targeted and comprehensive.

     In the first quarter, Beijing focused on boosting lending to businesses and

diverting resources to anti-epidemic efforts in places such as Wuhan, Tang said.

     There is no need to directly aid the average consumer, who typically have

more savings than their U.S. counterparts, while the hundreds of millions living

in their villages do not incur much expense, he said. The government needs to

concentrate on helping those relatively few living near the poverty line, he

noted.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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